Here’s the kind of great news we don’t get every day: 69 million Americans are going to see an increase in their social security benefits. The bump in benefits went into effect in January of 2020 and will translate into a 1.6 percent increase in Social Security and Supplemental Security Income (SSI) benefits. About 8 million SSI beneficiaries started receiving increased payments in December of 2019.
The 2020 increase in benefits amounts to about $288 per year for the average beneficiary. The cost of living adjustment (COLA) increase to Social Security and SSI benefits in 2019 was 2.8 percent, so the 2020 increase is actually less than last year’s. The average COLA increase in Social Security and SSI benefits over the past decade has been 1.4 percent.
The federal annual COLA determines increases in Social Security benefits. When the cost of living goes up, benefits increase. It’s that simple. The Department of Labor measures the cost of living through the Consumer Price Index (CPI). Generally, consumer prices rise when inflation increases, making the cost of goods and services greater. Higher prices are offset by the cost-of-living adjustment. This means that inflation does not result in diminished Social Security benefits.
The national wage index also influences Social Security benefits. The maximum amount of income and earnings subject to Social Security payroll taxes also changes with the federal wage index. This also changed in 2020, and you can find the maximum amounts of taxable earnings as well as exemptions here.
Full retirement age is 66. If you are younger than 66 and collecting Social Security, your earnings limit increased to $18,240 as of Jan 2020. For each $2 earned over that amount, the Social Security Administration (SSA) will deduct $1 from your benefits.
If you are turning 66 in 2020, your earnings limit will increase to $48,600. If you are younger than 66 and make more than $48,600 while collecting benefits, the government will take $1 for every $3 earned over that amount until the month of your 66th birthday.
It’s important to know what your benefits will be or how they might change. If you sign up for a My Social Security Account, you can check your benefits status any time. Retirement, survivor, and disability beneficiaries should take advantage of this easy way to access information about your own Social Security or SSI account.
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